Local condo salesman Bob Rennie describes how speculators have deserted the market for the Olympic Village condos, The Province, 8 Oct 2010 –“We have a huge problem with the Olympic Village that it’s not for speculators, it’s for a community of homeowners. I’ve lost that buyer who says, ‘I’ll buy it today and over the next two or three years I’ll figure out whether I’m a passive investor or whether mom lives in it or whether we live in it and sell our house.’ ”

What Mr Rennie is saying is that when people stop buying Vancouver RE simply for the reason that they believe that prices are going up indefinitely, he (and by inference the whole market) has a problem. An interesting observation. One that local RE bears have been singing from the roof-tops for years.

We’ve previously described how almost ALL Vancouver RE purchases over the last 5 years (or more) have had a speculative component woven into them. People have only paid higher and higher prices under the assumption that prices would continue on their upward trajectory, regardless of their value by any fundamental measure. That is the very essence of speculation.

We’ve seen speculative evaporation in the periphery, and now in the ridiculously overpriced Olympic Village condos mentioned above. But speculation will soon leave ALL areas of the market. We think that the most devastating aspect of this process will be when COVERT speculation disappears, meaning that those innocent looking first-time-buyers and move-uppers, who in recent years were merrily signing their lives away with background expectations of price increases, will freeze their buying intentions when they realize that the market has reversed.

What will prices be when people are buying homes without the expectation of price gains? What will prices be when people are buying homes as shelter (+ modest ownership premium) and not as ‘investment’ (read: speculative) vehicles?Certainly far lower than they are today.-vreaa

My father in law thinks that the city should sell lottery tickets on a per suite basis to unload these. For a $700,000 property and at $100/ticket the odds would be better than the PNE home lottery; you could keep the odds at 1 in 7000 and make the smaller suites go for less per ticket, the larger go for more. I like the plan, m’self, because it’d be a choice with likely downside but possible upside, rather than a taxation obligation with no upside.

If you ever met Rennie you would be surprised about how candid he is about these issues. One of the keys to his success over the years is that he was able to maintain credibility. He gets where it is now. He also knows that if the City delays waiting for a “come back” in the market they will be bigger losers in the long term.

Rennie made hay while the sun shone, and nobody can fault him for that; it’s ‘good business’. He is a salesman, and he clearly did that well. He was in the right place at the right time, and capitalized on the frenzied market.
But, as they say, let’s not mistaken a bull market for genius.
I’m not yet sure that he really ‘gets where it is now’ for the whole market. Salesmen are not the best market prognosticators.

Also, we should not start rewriting history.
If Rennie had indeed seen this market for what it is (a speculative bubble that started in about 2003 and was already getting dangerous by 2005-2006) then he has most definitely not been candid about that. He has happily sold as many Vancouver condos as he could to anybody who would buy, speculative money included (preferred even). He has either been ignorant or dishonest, and I’ll be charitable in my judgment and guess the former. He hasn’t seen the bubble for what it is.
To be fair to him, it is exceptionally difficult to recognize a bubble from the inside, especially if you’re one of the most successful insiders.

It’s ridiculous to hold salesmen responsible for bubbles, so I don’t think anybody will seriously do that (but we will likely hear him scorned during the crash).
Many have seen him as more than a salesman, however, and he has stepped into a market-commentator role voluntarily a lot of the time. So perhaps he will deserve to be implicated in the aftermath more than somebody who had clearly stated that they were simply a salesman promoting product.

Regarding the best plan now for the OV, I agree with you (and with Rennie, if that’s what he’s saying) that it would be best to sell these units asap rather than into a much weaker market 2 or 3 years down the line.

It’s ridiculous to hold salesmen responsible for bubbles, so I don’t think anybody will seriously do that (but we will likely hear him scorned during the crash).

I would disagree. We hold sellers responsible for their product. We have an entire arm of the law go after dealers and producers that create products we deem damaging to society. So why should he get a free pass?

He is not free of guilt and he should not get off free either. Neither should have been the banks. It seems certain people are not only above the law but also above the rules of the market. When things go well for them we admire them, when things go bad for them we feel so bad for them that we decide to give them money because… Well, once upon a time they were so good.